Since then the coalition has repeatedly sought to "mobilise capital investment" in a series of Budgets and autumn statements unveiling significant spending commitments.

"I think we comforted ourselves at the time that it was actually no more than what [former chancellor] Alistair Darling spelt out anyway, so in a sense everybody was predicting a significant drop off in capital investment," Clegg told the House magazine.

"But I think we've all realised that you actually need, in order to foster a recovery, to try and mobilise as much public and private capital into infrastructure as possible.

"The economic evidence is overwhelming. It helps create jobs now - people go on to construction sites. It raises the productive capacity of the economy in the longer run."

The comment is the first major public admission of regret from a senior coalition minister that the government's approach has not maximised opportunities for growth.

His comments come as the UK faced the spectre of a triple-dip recession, with figures from the Office for National Statistics confirming the British economy shrank by 0.3% in the final quarter of 2012.

Health minister Anna Soubry, speaking on Question Time last night, said "there may be some merit" in Clegg's claim. She insisted there had been "phenomenal investment" in capital spending subsequently, however.

Labour seized on the comments to attack the coalition's future spending plans.

"The real question is what Nick Clegg's government is going to do about it," shadow chief secretary to the Treasury Rachel Reeves said.

"We have urged ministers to bring forward infrastructure investment and build thousands more homes, but they have refused to listen.

"Nick Clegg also claims he wants to put money into the pockets of people on middle and low incomes.

"So he should now admit that the VAT rise was a mistake and cancel the plan to cut tax credits for working families on modest incomes on the day millionaires get a tax cut."